1. II. Evaluating Economic Performance
*** All societies set economic and social goals for themselves!
*** A country's economic system will usually reflect the goals they are trying to
meet.
A. Economic and Social Goals of the U.S.:
1. Economic Freedom - people want to make their
own econ. decisions
2. Economic Efficiency - resources must be used
wisely so more wants and
needs can be satisfied
3. Economic Equity - getting a "fair chance"
a. illegal to discriminate
b. no false advertising, unfair pricing,
dangerous products
4. Economic Security - financial protection
a. Social Security, disability, retirement
benefits
b. protection from layoffs, emergencies
5. Full Employment - provide many jobs
6. Price Stability - keep prices same
a. inflation - rise in general level of prices
b. fixed income - income doesn't increase

2. 7. Economic Growth
a. people will want more goods and services
b. population will continue to grow = more
wants and needs
8. Future Goals - goals will change over time
B. Trade-Offs Among Goals
1. Remember --- making certain choices to reach
certain goals will have other effects...example:
a. raise minimum wage:
- could increase unemployment
- restricts freedom of employers to pay
what they think is fair
III. Capitalism and Free Enterprise
A. capitalism - a system in which private citizens own
factors of production
B. Characteristics of a Free Enterprise Economy:
1. Economic Freedom
2. Voluntary Exchange
a. buyers and sellers freely engage in
market transactions
b. both feel like they're better off after
transaction

3. 3. Private Property
a. people can control private possessions as
they wish, so long as they don't interfere
with rights of others
b. includes your skills, abilities, ideas
c. provides incentives - rewards you earn are
yours to keep
4. Profit Motive
a. profit - the extent to which people or
organizations are better off at the
end of a period than they were
at the beginning
b. people want to improve their well-being
C. The Role of Entrepreneurs
1. everyone benefits when entrepreneurs succeed:
a. he/she gets profits
b. workers get more jobs and $
c. consumers get better products
d. government gets more tax dollars
e. increases competition --- better products
and prices